Denial of ITC Solely for Want of Transport Documents Without Testing Genuineness of Supply is Unsustainable
Denial of ITC Solely for Want of Transport Documents Without Testing Genuineness of Supply is Unsustainable
Issue
Whether the Department is justified in denying Input Tax Credit (ITC) to the petitioner solely due to the absence of lorry receipts and weighment slips, despite the petitioner producing invoices containing vehicle numbers and proving tax payment by the supplier.
Facts
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The petitioner purchased goods from a supplier, “M/s Ecofriendly Coco Products,” under eight invoices issued between January 2018 and August 2018.
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The supplier was actively registered under GST during the relevant transaction period, though their registration was cancelled at a later date.
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The invoices produced by the petitioner explicitly contained vehicle numbers, and the transportation of goods was arranged directly by the supplier.
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The supplier had filed their GST returns reflecting these specific supplies and had successfully paid the tax due to the government.
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The tax authority issued an order denying ITC to the petitioner, ruling that they failed to discharge their burden of proof under Section 155 solely because they could not produce lorry receipts and weighment slips.
Decision
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Absence of documents not absolute ground for denial: The presence of valid tax invoices containing vehicle numbers, along with evidence of return filing and tax payment by the supplier, creates a strong prima facie case that warrants a deeper inquiry into the actual genuineness of the supply.
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Sole reliance on transport proofs is unsustainable: Confirming the reversal or denial of ITC strictly on the non-furnishing of specific transport documents (like lorry receipts or weighment slips), without examining the broader genuineness of the underlying transaction, is legally fragile.
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Final Ruling: The impugned assessment order denying the ITC was set aside, and the matter was remanded back to the tax authority for a fresh reconsideration of the facts. The ruling was decided in favor of the assessee.
Key Takeaways
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Genuineness Over Hyper-Technicalities: While discharging the burden of proof under Section 16 read with Section 155 is essential for claiming ITC, tax authorities cannot adopt a hyper-technical approach by focusing exclusively on missing ancillary transport documents while ignoring direct proof of tax payment and vehicle records.
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Effect of Subsequent Cancellation of Registration: The subsequent cancellation of a supplier’s GST registration does not automatically invalidate transactions that took place when the registration was active, provided the buyer can prove the genuineness of the purchase at the time of supply.
HIGH COURT OF MADRAS
Akal Trade Links
v.
Assistant Commissioner (ST)
Senthilkumar Ramamoorthy, J.
WP No. 20601 of 2023
WMP Nos. 19985 & 19986 of 2023
JUNE 5, 2026
B. Raveendran for the Petitioner. R. Sethu Prabakaran, Government Counsel (Tax) for the Respondent.
ORDER
1. An order dated 28.04.2023 confirming the tax proposal in respect of wrongful availment of Input Tax Credit (ITC) is assailed in this writ petition.
2. Learned counsel for the petitioner submits that the tax demand pertains to purchases made by the petitioner from Eco-friendly Coco Products in Assessment Year 2018-2019. He submits that at the time of delivery of goods, the GST registration of the supplier had not been cancelled. He also submits that the supplies are supported by tax invoices containing the details of the vehicle through which goods were transported and delivered to the petitioner. He further submits that the supplier had filed returns reflecting the supplies and that the requisite taxes thereon were paid by the supplier. Therefore, learned counsel submits that the impugned order cannot be sustained.
3. In response, learned Government Counsel appearing on behalf of the respondent submits that the burden of proof in respect of the availment of ITC is statutorily imposed on the person availing ITC under Section 155 of the applicable GST Statutes read with Section 16 thereof. Because the petitioner failed to discharge such burden by providing evidence of the actual movement of goods, he submits that the petitioner’s availment of ITC was held to be unlawful.
4. The impugned order refers to the eight invoices issued by the Ecofriendly Coco Products. These invoices were issued between January 2018 and August 2018. The record shows that the supplier was a registered person during the relevant period, and the registration was cancelled subsequently. The petitioner has included in the paper book, the relevant invoices referred to in the impugned order. Each invoice contains the vehicle number under which the goods were transported. The impugned order records the petitioner’s contention that the supplier arranged the conveyance for the delivery of the goods to the petitioner.
5. In view of the above contention, further examination with regard to whether the supply was genuine was warranted, especially in light of the fact that the supplier had filed requisite returns under the applicable GST statutes and paid taxes in respect thereof. Without undertaking this exercise, and merely on the ground that lorry receipts and weighment slips had not been filed, the tax proposal was confirmed.
6. Taking into account the totality of facts and circumstances, the impugned order cannot be sustained and reconsideration is warranted. Towards that end, the impugned order dated 28.04.2023 is set aside and the matter is remanded to the respondent for reconsideration. The petitioner is permitted to place on record additional documents relating to the supply within 15 days and within 3 months from the date of receipt thereof, fresh order shall be issued after providing a reasonable opportunity of being heard to the petitioner.
7. The Writ Petition is disposed of on the above terms. Consequently, connected Miscellaneous Petitions are closed. There shall be no order as to costs.
